State worker raises kicking in

Service Employees International Union members worked hard for Gov. Jerry Brown's Proposition 30 tax increases last year, and invoked that support in negotiating for raises this year. (AP file photo/Reed Saxon)

Service Employees International Union members worked hard for Gov. Jerry Brown's Proposition 30 tax increases last year, and invoked that support in negotiating for raises this year. (AP file photo/Reed Saxon)

Already among the best compensated state workers in the nation, tens of thousands of California employees are set to receive pay raises on Monday, along with an end to unpaid furlough days and an increase in the state’s contributions to their health care.

The state worker increases total more than $480 million in the spending plan signed this week by Gov. Jerry Brown.

The 2 percent to 5 percent pay increases, negotiated by the previous administration, will be added to the top of each pay range for about 80 percent of the workforce. Others would receive similar hikes after reaching that level of seniority for a year.

Raises account for about $420 million of the added cost, with roughly $60 million going to health and dental care. Because of the way the state has accounted for furlough days, the cost of restoring those paid hours could not be calculated.

California state employees already have the highest average salary at $70,777, according to a study last fall by the nonpartisan Center for Continuing Study of the California Economy in Palo Alto. That compares with the national average of $54,976 in 2011, according to the study.

2012-2013
20% (107)

2010-2011
12% (63)

2008-2009
18% (95)

2006-2007
21% (110)

Earlier
30% (157)

532 total votes.

Trailing the Golden State were New Jersey at $69,302, Connecticut at $67,828 and New York at $67,350. The authors note that California ranks near the middle for state employee pay if it’s taken as a percentage of state personal income.

State workers get raises periodically based on years of service, but they last had an across-the-board raise in 2006-07. Former Gov. Arnold Schwarzenegger entered contracts that backloaded raises until this summer, banking on an improving economy.

Government workers are due for another raise more quickly this time.

Brown and lawmakers are working to finalize a new three-year pact to take effect one year from now with the union representing about half of the 180,000 state workers.

Provisions on the table would increase compensation costs by hundreds of millions of dollars. The tentative agreement with the Service Employees International Union Local 1000 calls for a 4.5 percent across-the-board raise — all of it coming in the final two years. Negotiations continue with many of the state’s remaining bargaining units.

In calling for an increase, SEIU invoked its support of Brown’s Proposition 30 sales and income tax increases approved by voters in November. The measure, which temporarily hiked the sales tax a quarter cent on the dollar and boosted income taxes on the wealthy on a sliding scale, was sold as a fix for school budgets, but freed up billions of dollars of state money previously mandated to be spent on schools.

Critics say raises for state employees were not what was promised with the ballot measure. Republican Senate leader Bob Huff, R-Diamond Bar, said putting more money toward reforming education and further chipping away at state debt should have been the first priority. “Unfortunately, that did not happen,” Huff said.

The Brown administration says it recognizes that through cutbacks and hard work state employees have played a vital role in stabilizing the state’s finances over the past five years. Officials described the tentative pact as prudent because it phases in the pay increases no sooner than next year based on the state’s economic recovery.

In addressing the agreement, SEIU Local 1000 President Yvonne Walker said the union accomplished all four of its top priorities: across-the-board raises, no new furloughs or paid-leave days, preserving health benefit premiums and protecting retirement security.

Under the proposed deal, If California meets certain revenue targets, state workers would receive a 2 percent raise on July 1, 2014 and a 2.5 percent increase on July 1, 2015. The entire 4.5 percent increase would be effective July 1, 2015 if the targets are not met.

SEIU officials did not return messages seeking comment on the raises taking effect this week. However, in a recent announcement to members, union officials described the past negotiations as a difficult undertaking given the depths of the economic recession. Union leaders said the state demanded more than $1 billion in take-aways and no wage increase.

“After spending literally hundreds of hours battling the Schwarzenegger Administration in 2010, we reached an agreement that cut those concessions in half,” the letter said.

Under the expiring provisions, SEIU state workers received eight hours of unpaid leave a month that penciled out to a 4.6 percent pay cut. The previous deal also increased employee pension payments by 3 percent, with most contributing about 8 percent of their pay to help cover retirement costs.

The contract tentatively set to take effect next summer is estimated to increase the state’s employee compensation costs by more than $700 million over three years.

There remains another factor that could put the state on the hook for tens of millions more — management raises spurred by the employee pay hikes.

Nick Schroeder a public employment expert in the Legislative Analyst’s Office, said when rank-and-file employees negotiate raises, managers and supervisors don’t typically receive a bump. Problems arise when the pay spread between managers and rank-and-file workers is too small to create an incentive for employees to accept the additional responsibilities of becoming a manager, Schroeder said.

Analysts say it would cost another $118 million to extend the raises to managers and supervisors of workers represented by SEIU.

“Any analysis should really be done at a micro level,” Schroeder said. “We would want to be very surgical about it.”

Democratic Assemblyman Rob Bonta of Oakland, chairman of the Committee on Public Employees, Retirement and Social Security, said the tentative agreement represents savings in pension dial-backs (approved by the state last year) for new employees while allocating moderate cost-of-living increases.

“This is a modest agreement that recognizes the role state workers have played in stabilizing California’s finances in the last few years,” he said.

The legislature’s analysts say average state worker pay was reduced by about $21,000 over the last five years. The average employee received 79 furlough days over that period.

Democratic Assemblyman Roger Dickinson, whose Sacramento district is home to scores of state workers, said he’s watched them being squeezed by reductions and furloughs. Dickinson said he’s talked to dozens of people being pushed to, and, over the brink of foreclosure or bankruptcy as their pay was slashed amid the recession.

“I’ve watched them change the course and direction of their lives and the lives of their children because they’ve been asked to sacrifice beyond any measure of others even while they’ve been asked to do more,” he said. “The response has been one of digging in, digging deeper, doing the job, performing the public service that they are dedicated to, and delivering the indispensable services without which the California dream would ground to a halt.”

Assemblyman Tim Donnelly, R- Twin Peaks, said past pay cuts for lawmakers and state workers were appropriate and should continue until the state is in better financial shape.

Donnelly noted he and others are rejecting a 5.3 percent pay raise due to state politicians in December, increases made possible in part due to passage of Proposition 30.

“It doesn’t make any sense to raise the taxes of the people in order to raise anybody’s pay,” Donnelly said. “Until we have given back the taxpayers some of their money — until we have lowered tax rates, which were raised supposedly to pay for ongoing obligations like education funding — then this package here … should be voted down.”